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Much Promise, Little Gain
The American Lawyer
June 1, 2009
Generally speaking, when large sums of money change hands, lawyers are sure to get a piece of it. But the Great Bailout of 2009 hasn't been the bonanza for law firms those numbers suggest.
While lawyers take pride in handling some of the first deals under the government's economic stimulus programs, a dribble of deals does not a practice make. Other than a few matters, lawyers say these programs do not appear to have generated a lot of legal work, at least so far.
To be fair, lawyers and consultants say, these programs are still in their early stages. A recent survey by BTI Consulting Group, Inc., of corporate counsel found that legal spending on securities and finance practices was expected to increase 2.1 percent in the second half of 2009.
The Ford Motor offering would not have happened if not for the Federal Reserve's Term Asset-Backed Securities Loan Facilities. The program - called TALF for short - was designed to help get credit moving again. Participating investors borrow from the Federal Reserve to buy up bonds backed by credit card loans, auto loans, student loans, and small-business loans. Investor demand to participate in TALF, while weak in the first two months of the program, surged in May with the Fed receiving $10.6 billion in requests.
That means work for law firms. But those deals - 16 total through May - are nothing compared to the boom times of securitization. "In '07 we would have three or four large deals going at any one time," says Dechert partner John Timperio, who represented Cabela's Inc. in a private offering of $500 million in credit card debt.
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